Solution Found!
A life insurance company sells a $100,000 one-year term
Chapter 6, Problem 4CT(choose chapter or problem)
Problem 4CT
A life insurance company sells a $100,000 one-year term life insurance policy to a 35-year-old male for $200. According to the National Vital Statistics Report, 56(9), the probability the male survives the year is 0.998725. Compute and interpret the expected value of this policy to the life insurance company.
Questions & Answers
QUESTION:
Problem 4CT
A life insurance company sells a $100,000 one-year term life insurance policy to a 35-year-old male for $200. According to the National Vital Statistics Report, 56(9), the probability the male survives the year is 0.998725. Compute and interpret the expected value of this policy to the life insurance company.
ANSWER:
Solution:
Step 1 of 2:
A life insurance company sells a $100,000 one-year term life insurance policy to a 35-year-old male for $200.
The probability that the male survives the year is 0.998725.
We have to compute and interpret the expected value of this policy to the life insurance company.